New Government Promises ‘Financial Support Mechanism’ For Nuclear Power Industry

Date: 14/05/10

Energy companies are determined to press ahead with tens of billions of pounds of investment in new nuclear power stations, in spite of the appointment of the Liberal Democrats’ Chris Huhne as energy secretary, industry executives said on Thursday.

The Lib Dem manifesto committed the party to “reject a new generation of nuclear power stations”, arguing that they would be more expensive than energy-saving measures or renewables such as wind power.

Mr Huhne on Thursday reiterated his sceptical position about new reactors, telling BBC News that they would go ahead only if energy companies were prepared to invest without any new government subsidy, and warning: “No new nuclear power station has been built without new public subsidy for a very long time.”

However, the energy companies looking at making investments of £40bn-plus ($58bn) to build up to 12 new nuclear power stations in Britain said that they were reassured by the details of the coalition agreement.

Vincent de Rivaz, chief executive of the UK arm of EDF, the French energy group that plans to build the first new reactor in Britain for more than 20 years, described Mr Huhne as “a man we can do business with”.

He added that the coalition agreement had removed uncertainty by promising to open the door to new nuclear construction, and making two important commitments.

It promises a vote in parliament on the National Policy Statement setting out the need for new nuclear plants, which will guide the planning authorities; and a new financial support mechanism for low-carbon energy that would help nuclear as well as renewable power.

The NPS will set out the Conservative commitment to allowing “the replacement of existing nuclear power stations” provided the new plants “receive no public subsidy”.

The Lib Dems will contest that statement, but their MPs have promised to abstain in the parliamentary vote.

EDF has always insisted that new reactors could be built without public subsidy, but has advocated using the tax system to support the price of carbon dioxide emissions permits in the European Union’s trading scheme; in effect creating additional help for low-carbon energy, including nuclear.

That idea was backed by the Conservatives in the run-up to the election, and has been adopted as coalition policy.

Paul Golby, chief executive of the UK arm of Eon, the Germany energy group, said that the appointment of Mr Huhne was “not necessarily” a setback for his plans to invest in new reactors in partnership with RWE, also of Germany.

“The Liberals have said that their concern with nuclear is cost, and I think that if that is their criterion, we can show conclusively that nuclear is comparable with other low-carbon energies such as renewables, and coal with carbon capture and storage,” Mr Golby told the BBC.

“I think we can demonstrate that nuclear has to be part of our future energy mix if we are going to keep the lights on and reduce carbon.”